Lyu v Jeon

Relevant circumstances 9At the time of the accident, the respondent was a citizen of South Korea and 24 years of age. She had finished high school at age 18 and completed a university course in physiotherapy in South Korea. She had then worked as a physiotherapist for 12 months as well as undertaking a 6-month part-time English language course. She arrived in Australia in July 2006, intending to study physiotherapy at the University of Newcastle. At the beginning of 2007, she enrolled in a further English language course with a view to commencing her physiotherapy course in July 2007. The applicant also was from South Korea and a physiotherapy student. They had met only once before they came to Australia. After they arrived, they attended the same English language course. 10On the night of the accident, the respondent and applicant had been celebrating their successful completion of that course with two male friends. One was Jonathon, the applicant's boyfriend, and the other a Korean known as Sean. They were in a home unit rented by Jonathon in Jesmond, near Newcastle. Late in the evening the applicant and Jonathon left the unit with the intention of purchasing more beer. There was a discussion as to whether they were fit to drive. The respondent thought they were going to walk to the local hotel. However, she heard the sound of the applicant's car's engine starting. She and Sean ran outside to try and stop them driving the vehicle, which was parked in the driveway. The applicant was in the driver's seat. The respondent ran towards the front passenger side of the vehicle. When she was standing adjacent to the front wheel on that side, she banged her hand on the bonnet and yelled to the applicant to stop. As she did so, the vehicle reversed backwards slightly, with its front wheels angled to the right, and drove over her right foot and lower leg. For a while her right foot was pinned under the passenger side wheel. The respondent sustained serious and permanent injuries to her right foot and lower leg. 11An ambulance was called. Whilst the respondent, the applicant, Jonathon and Sean were waiting for the ambulance, it was decided that, to protect the applicant, they would say that the respondent had fallen down stairs. It was thought that if the truth was revealed, the applicant might be charged with drink-driving and possibly have to go to gaol or not be allowed to remain in Australia to continue her studies. When the ambulance officers arrived, the respondent told them that she had fallen down stairs. That story was repeated to the emergency room doctors once the respondent was conveyed to the John Hunter Hospital. The medical staff indicated that they did not believe the respondent because of the nature of the injuries she had sustained. She remained in hospital for three weeks during which time she underwent two surgical procedures to fix the several fractures in her right ankle and foot. 12The applicant visited the respondent whilst she was in hospital and told her that she would get money from her parents to pay for her medical expenses. The respondent said that at this time she was fearful, her English was not good, she did not wish to get anyone into trouble and was in great pain and not clearly thinking. The primary judge made no finding as to whether the respondent had spoken to her mother during this period or received advice as to whether she should speak to the motor vehicle insurer. The applicant says that such a finding should have been made. 13Because of the severity of her injuries, and the treatment they required, the respondent did not commence her physiotherapy course until the first semester in 2008. In about October 2007 the respondent made a claim on her Overseas Student Health Cover (OSHC) insurance for payment of her hospital and medical expenses. In that claim she stated that her injuries had resulted from her falling down stairs. Between then and July 2010, the respondent received $27,514.26 under that insurance. Those payments covered about two-thirds of her medical expenses. Until about November 2009, the balance of those expenses were paid either by the applicant or her parents. The primary judge made two findings about this claim. They were that it was made in February 2008 ([20]), and that she was not satisfied that the respondent had "deliberately deceived the company providing cover under this policy" ([25]). The applicant challenges each of those findings. 14In November 2007 the respondent returned to South Korea and stayed with her parents for two to three months. There was discussion as to the fact that she had not made a claim on the applicant's insurer. Her mother was angry that she had not done so. Her mother did not press the respondent after she explained that she had not wanted to get the applicant into trouble. During this period, the respondent and her parents also met the applicant's father, who apologised for what had occurred, and agreed to continue to cover the respondent's medical expenses. 15In February 2008 the respondent returned to Australia to commence her physiotherapy course. At that time she met the applicant in the library at the University of Newcastle. The applicant told her that Jonathon had called the motor vehicle insurer and been told that the respondent could not claim because there was no proof that the accident had happened as the medical records stated that she had fallen down stairs. 16In about September 2008, the respondent of her own initiative, contacted a Korean-speaking solicitor whose details she obtained from a Korean community website. She explained how the accident had happened and that she had not received any compensation. She said that the applicant was not paying the balance of her medical expenses as agreed. She explained that she had wanted to have surgery to her right foot, but that the applicant was asking her to delay doing so because of the cost, which she presumably could not afford. The respondent told the solicitor that she did not want to get her friend into trouble. The solicitor responded that if she did not want to sue the applicant, she should speak to the insurance company. The respondent did not do so. Instead, she spoke to the applicant who repeated that the insurer had denied the claim. She did not take the matter further because she did not want to get her friend into trouble. 17Over the next twelve months the applicant or her family paid some of the respondent's expenses, but did not pay or were late in paying others. In November 2009 the applicant told the respondent that she could not afford to continue to pay the medical expenses. As a result, the respondent decided to seek legal advice. She first contacted a solicitor by email on the morning of 4 December 2009. There was then a telephone conversation followed by a meeting. The respondent was given advice about her rights to make a claim for compensation and completed a motor accident claim form. That claim was submitted on 9 December 2009.

The primary judge's reasoning 18The primary judge concluded: "[31] I considered [sic] that a reasonable person who was a young woman of twenty-four, living at a distance from her native country and family, unfamiliar with the language and the law relating to personal injury compensation in a foreign country, would agree and would be justified in agreeing to protect a close friend who was also in a foreign environment from potential criminal conviction, deportation and exclusion from her field of study. A reasonable person in this position would, in my view, be fortified by the [applicant's] agreement to meet all medical expenses and would be affected by the shock and pain of the serious injuries suffered. [32] The [respondent's] continuing delay in seeking independent legal advice from lawyers specialising in personal injury law was the result of misinformation provided by the [applicant]. [33] Ultimately the period of delay was not excessive. As already noted there was no suggestion of prejudice to the [applicant], nor was it suggested that the [applicant] could not secure a fair trial of the issues. The [respondent] suffered serious injuries to her foot with potential ongoing consequences to her career in physiotherapy." 19The primary judge made the following findings as to the "misinformation" provided by the applicant ([32]): that at the meeting in February 2008 she was told that no claim could be made because there was no proof that a motor vehicle accident had occurred ([21]); that after speaking to the Korean solicitor in September 2008 she again spoke to the applicant who told her that she could not claim on the insurer because of the misreporting of the circumstances in which she was injured ([23]); and that in relation to the claim on her OSHC insurance, the respondent generally believed, based on information provided by the applicant and Jonathon, that she was not entitled to compensation or damages from the motor vehicle insurer ([26]). This last finding assumes, as the primary judge found ([20]), that the claim on that insurance was made in February 2008 and after the meeting with the applicant and her boyfriend, Jonathon.

The argument on appeal 20The applicant's argument has been outlined above. It is submitted that her Honour did not take into account a conversation that the respondent had with her mother on the day after the accident: cf [15]-[18]. Secondly, it is submitted that her Honour erred in concluding that the respondent's continuing delay in seeking independent legal advice was as a result of her receiving misinformation: [32]. It is said that the delay was due to her desire not to get the applicant into trouble and her preparedness not to pursue a claim provided that her expenses continued to be paid. Thirdly, it is submitted that the primary judge erred in not proceeding on the basis that the respondent had deliberately deceived the OSHC insurer: cf [25]. It is said that her Honour erred in finding that at the time the respondent made the claim under this insurance, she believed that she was not entitled to compensation or damages from the third party insurer: [26]. Next, it is submitted that in addressing whether a reasonable person in the respondent's position would have experienced the same delay, the primary judge wrongly focussed upon whether that delay ought be excused because there was no suggestion of prejudice to the applicant or her insurer: [33].

Relevant principles 21The applicant does not contend that the primary judge erred in concluding that the explanation provided was not "full" in the sense that it was sufficiently complete as to what happened in and following the accident and as to why she did not notify a claim to the third party insurer until December 2009: see Diaz v Truong [2002] NSWCA 265; 37 MVR 158; and the discussion per Allsop P (Spigelman CJ, Campbell, Macfarlan and Young JJA agreeing) in Walker v Howard at [73], [86]-[89]. The issue is whether her Honour erred in concluding that her explanation was "satisfactory". 22In Diaz v Truong, Giles JA said (at [42]) of the equivalent provision in s 40(2) of the Motor Accident Act 1988: "The standard of a reasonable person in the position of the claimant failing to comply with a duty is understandable. The standard of a reasonable person in the position of the claimant being "justified in experiencing" a delay is more obscure. Experiencing something normally means being subjected to it, the object of acts or omissions by another or others. What is meant by being justified in experiencing a delay? It must mean that the reasonable person in the position of the claimant would have been subjected to the delay and the subjection to the delay would have been justified. The hypothetical experiencing of delay must have the quality of a justified experiencing of delay." That elucidation of what being "justified in experiencing" a delay means is not controversial: see Russo v Aiello [2003] HCA 53; 215 CLR 643 at [7], [73]; Buller v Black [2003] NSWCA 45; 56 NSWLR 425 at [46], [94], [100]; Walker v Howard esp at [96]-[97], [101]-[102]. 23As Allsop P explained in Walker v Howard (esp at [64], [68], [69], [90], [97]), the test so expressed is a construct for the making of the evaluative judgment or assessment as to whether, given the claimant's position, the delay which occurred was reasonably justifiable; that question to be answered by asking whether a reasonable person in the claimant's position would have experienced that delay. It requires that characteristics and circumstances of the claimant be taken into account when applying the objective standard. In some cases it will not be easy to determine the extent to which the characteristics of the person in question are to be attributed to the "reasonable person" because those characteristics may not sit comfortably with the notion of the "reasonable person". The present is not such a case. 24Two further matters are, however, relevant in the present context. First, as Gleeson CJ observed in Russo v Aiello (at [5], [7]), what will constitute justifiable delay on the part of a reasonable person in making a claim is to be considered in the light of the legislative purposes of the MAC Act. See also [74] per Gummow and Hayne JJ. Those purposes include encouraging the early investigation, assessment and resolution of claims so as to advance the interests of claimants in having prompt treatment and rehabilitation, and in having the prompt payment of lost earnings; and so as to advance the interests of insurers in more accurately predicting claims frequency and formulating premiums. The Act seeks to achieve these objects by the imposition on both claimants and insurers of time limits and obligations to act expeditiously: see also Walker v Howard per Allsop P at [90]. 25Secondly, as Gleeson CJ also observed in Russo v Aiello at [7]: "...what the Act requires is justification for delay; not demonstration that the delay caused no harm. ... the focus of the statutory concept of a satisfactory explanation is upon justifying delay, rather than excusing it. It is one thing to say that conduct is justified by reference to the way in which a reasonable person in the position of a claimant could have been expected to behave. It is another thing to say that delay ought to be excused because it caused no identifiable harm to an insurer. It is the former, not the latter, question that is raised for consideration."

Disposition of the appeal 26It is necessary to deal first with the challenges to the findings of primary fact and then to address her Honour's conclusion that the respondent had provided a satisfactory explanation. 27The respondent gave evidence that on the day after the accident whilst she was in hospital she telephoned her mother and told her what had happened. Her mother told her that there was likely to be insurance on the car and that she or the applicant should speak to the insurer and tell the truth as to what had happened. The respondent explained that she spoke to the applicant instead of the insurer because she was in severe pain, taking morphine, drowsy and facing a series of operations. In this same period whilst she was in hospital she also came to an agreement with the applicant that she would pay the medical expenses rather than the respondent "go to the insurance company" (White Book, pp 243-245). 28This conversation with the respondent's mother established that at an early stage she was aware that there was likely to be an insurer to whom the accident should be reported. She was also reminded by her mother that she should tell the truth as to what had happened. The fact that the respondent also remembered this conversation indicates that during this early period, she was able, at least on some occasions, to think clearly and communicate and to later remember what had happened. Each of these matters was relevant when considering how a reasonable person in the respondent's circumstances would have behaved and responded. 29The respondent agreed that she made a claim on the OSHC insurance in about September 2007 (White Book, p 245). The primary judge's finding that this happened in February 2008 was in error: cf [20]. A claim form was completed by the applicant and signed by the respondent. At the time she signed that form the respondent knew that it stated that the accident "was not due to a motor accident". She also appreciated that the reason that the OSHC insurer would pay was because the accident had been reported as due to her falling down or from stairs (White Book, pp 245-246). The respondent agreed that it was because the insurer had been told that she had fallen down stairs that it had agreed to pay. In other words, the respondent knew that the insurer had been told an untruth and that it had agreed to pay on the basis of that untruth. The respondent points out that it was not squarely put to her in cross-examination that she appreciated that the insurer would not have paid if it had known that her injuries were suffered in a motor vehicle accident. That is so. However, her evidence was sufficient to require a conclusion that she had participated in the making of a claim on the insurer which she knew was not accurate in a significant respect. The primary judge should have found that the respondent had deliberately deceived the insurer: cf [25]; and that she did so in September or October 2007 and before any conversation with Jonathon about the availability of a claim against the motor vehicle insurer: cf [26]. 30The primary judge also found that the respondent's continuing delay in seeking independent legal advice was the result of misinformation provided by the applicant: [32]. The first occasion when that was held to have occurred was in February 2008 during a conversation in the University library: [21]. The respondent agreed in cross-examination that at this time she was exploring whether she should tell the insurer about the accident and make a claim for compensation. That she was doing so is consistent with an appreciation that there was an insurer and that she was entitled to make a claim against it in respect of the accident. The applicant told her that the insurer had said to Jonathon that she could not make a claim because there was no proof that the accident had happened. However, this was not the reason the respondent gave as to why she did not pursue any claim. She said that she did not want to get legal advice because she was concerned that if she did she would have to make a claim and sue the applicant who could, as a result, get into trouble. It was for that reason, rather than because she did not think that she could make a claim, that she continued with the arrangement with the applicant that she would get payments from the OSHC insurance, with the applicant and her family making up the difference (White Book, pp 248-249). 31That this was the reason why she did not notify the insurer or pursue a claim in February 2008 is consistent with her subsequent conduct in doing so only in November 2009 after the applicant had indicated that she could and would no longer honour that arrangement. It is also consistent with the respondent's evidence as to what she had told her mother when she had returned to South Korea earlier in November 2007. At that time, she explained to her mother that she had not told the third party insurer about the accident because she had not wanted to get the applicant into trouble (White Book, pp 246-247). 32The respondent gave evidence that after February 2008 there was "conflict" between her and the applicant because moneys had to be paid in advance for the provision of hospital services and she had to pay them using her father's credit card and then "chase" up the applicant. In September 2008 the respondent telephoned the Korean-speaking lawyer because the applicant would not agree to continue to pay for her to have surgery (White Book, pp 249, 253). The respondent told the lawyer that she had not made a claim for compensation because she did not want to get her friend into trouble. That was consistent with what she agreed was the position in February 2008. He advised that if she did not want to sue the applicant, she should speak to the insurer. She did not do so. Instead, she spoke to the applicant who told her that the insurer had "denied the compensation". Because she did not want to sue her friend she "gave up" (White Book, p 253). She did not give up because she believed she had no claim to pursue. Her subsequent conduct was only consistent with her believing otherwise. 33By November 2009 the applicant was not reimbursing the respondent for all her expenses. She had been paying either partially or not at all. The applicant told the respondent that she could not afford to pay any more. The respondent decided to seek legal advice after the applicant "had broken her promise" to pay medical bills. She told the solicitor to whom she spoke that since the applicant could not afford to pay, she did not care what might happen to her (White Book, p 254). Within a week or so she gave notice of her claim. 34This evidence does not support the primary judge's finding that the respondent's continuing delay in seeking legal advice was the result of misinformation provided by the applicant. Whilst the respondent may have been misinformed as to whether the third party insurer had denied any obligation to pay compensation, the reason why she did not seek independent legal advice was that she was concerned not to get her friend into trouble and was prepared not to do so whilst she was receiving payments from the OSHC insurer and had an arrangement with the applicant under which she was paid the balance of her medical expenses. When it became clear that the applicant could or would no longer perform that arrangement, she sought advice and acted on that advice. 35The primary judge's conclusion that her explanation was "satisfactory" requires reconsideration in the light of these further or different findings of fact which should have been made. In doing so, it is not relevant to take account of one matter to which her Honour made reference. That was that there was no suggestion of prejudice to the applicant or her insurer as a result of that delay which was said not to have been excessive: [33]. As Gleeson CJ observed in Russo v Aiello (see [25] above), the question is not whether the delay may be excused as not prejudicial; it is whether it was "justified" in the relevant sense. 36A reasonable person in the respondent's position would not have persisted in delaying notifying the insurer of her claim beyond late 2007. She was no longer hospitalised. Whereas she may have been confused and heavily sedated during her earlier period in hospital, that was no longer the case. Whilst she was young, in a foreign country, not familiar with local motor accident laws and no doubt concerned for the welfare of her friend, the respondent nevertheless appreciated that there was an insurer against whom a claim could be made and which should be notified of the accident. She also knew that there were solicitors who could advise as to what she should do. She knew that a false story had been told at the hospital. The applicant had agreed to meet her medical expenses. The respondent then agreed to participate in the making of a false claim against a different insurer, albeit encouraged by the applicant to do so. 37A reasonable person in those circumstances is not to be assumed to have done likewise. Reasonable conduct may involve mistakes and errors of judgment, particularly by people who may be young and fearful or pressured. However, those errors, when subsequently appreciated, may be corrected. Reasonable conduct suggests rational and straightforward behaviour, not behaviour calculated to mislead or known to involve falsehood. By late 2007, although a person in her position might have remained concerned for the position of the applicant, that person either would have notified the insurer or, more likely, would have taken a solicitor's advice. Instead, from October 2007 onwards the respondent received significant benefits from the OSHC insurance. The objective evidence as to its terms established that the respondent would not have received those benefits if she had disclosed the true cause of her injuries. 38Having regard to the serious nature of her injuries, the absence of any prospect of payment from another insurer, the overwhelming likelihood is that the reasonable person in her position would then have been advised to and would have notified the insurer. That would have occurred within six months of the accident. Instead, the respondent delayed for a further two years. That delay occurred because the respondent was in receipt of payment from the OSHC insurer and had an arrangement with the applicant in relation to payment of the balance. A reasonable person in her position would not have been justified in that delay because that person would not have joined in the making of a false claim on that insurer and would have acted as I have described above. The attribution of such conduct to that hypothetical person takes account of the object of the legislation that claims should be notified promptly and without regard to the consequences for others whose liabilities may be insured by the third party insurer. 39For these reasons, her Honour erred in concluding that the respondent had provided a satisfactory explanation for her delay in notifying her claim. The appeal should be allowed and the order granting the respondent leave to commence proceedings should be set aside. 40The formal orders I propose are: (1)Grant the applicant leave to appeal. (2)Appeal allowed. (3)Set aside orders 1, 2 and 3 made by the District Court on 30 August 2011. (4)Respondent to pay the applicant's costs of the application for leave to appeal and of the appeal. 41DAVIES J: I agree with Meagher JA.

DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 21 December 2012